Closed-School and False-Certification Student Loan Discharges

Quick overview

Closed-School and False-Certification discharges are specific federal remedies for borrowers harmed by a school’s closure or misconduct. These discharges eliminate qualifying federal student loan balances when the Department of Education (ED) finds the borrower meets the statutory eligibility rules. They are not automatic; borrowers must apply and supply documentation. (Source: U.S. Department of Education, Federal Student Aid — studentaid.gov.)

How these two discharges differ

• Closed-School Discharge: Applies when a school permanently closes while a student is enrolled, or within a limited window after the student withdraws and cannot complete the program because of the closure. The key facts are the closure date and the borrower’s enrollment/withdrawal dates. (See ED guidance: https://studentaid.gov/manage-loans/forgiveness-cancellation/closed-school.)

• False-Certification Discharge: Applies when a school falsely certified a borrower’s eligibility for Title IV funds, signed a student’s name without authorization, or misrepresented a borrower’s ability to benefit from federal aid. False certification also covers certain forms of identity fraud or admission errors where the borrower was never actually eligible under federal rules. (See ED guidance: https://studentaid.gov/manage-loans/forgiveness-cancellation/false-certification.)

In my practice working with borrowers for more than 15 years, I’ve seen both outcomes — closed-school discharges after abrupt campus shutdowns and false-certification discharges when admissions paperwork or enrollment processes were improper.

Who is eligible — detailed criteria

• Closed-School Discharge eligibility generally requires you to have been enrolled when the school closed or to have withdrawn not more than 120 days before the school closed (the Department may consider extensions in limited circumstances). You must show you couldn’t complete your program because the school closed. Qualifying loans are federal Title IV loans; private loans are not eligible for ED discharges. (NSLDS and ED records help verify loan type: https://nslds.ed.gov.)

• False-Certification Discharge eligibility depends on the category of false certification. Common bases include:

• The school falsely certified your eligibility for Title IV aid (for example, enrolling you when you were ineligible);

• The school signed your name on aid applications without your authorization;

• The school misrepresented that you had satisfied program requirements when you had not; or

• Evidence of identity fraud related to your student aid application.

Eligibility rulings rely on documentation and a review by the Department. The ED may require corroborating records from the school, state agencies, accrediting bodies, or employer/licensure records.

Step-by-step: How to apply

1. Confirm loan types and school status. Check NSLDS and your Federal Student Aid account to verify loan type, servicer, and school closure information (https://nslds.ed.gov; https://studentaid.gov).
2. Gather documentation. See the checklist below. Collect enrollment records, withdrawal or termination letters, transcripts, enrollment agreements, advertising or job-placement claims, program materials, emails/texts, and any correspondence showing misrepresentation.
3. Complete the correct ED form. Use the ED’s closed-school discharge form or false-certification/borrower-defense forms on StudentAid.gov. Follow the instructions and sign where required.
4. Submit supporting documents. Upload or mail copies as directed by ED or your loan servicer.
5. Monitor your servicer account. Your loan servicer will mark loans as “pending discharge” while ED reviews the application. Keep copies of everything.
6. Respond to ED requests quickly. If ED requests additional information or proof, provide it promptly to avoid delays.

Internal resources and step-by-step guides on FinHelp that can help: Applying for Closed-School Student Loan Discharge: Step-by-Step, When can student loans be discharged for false certification?, and the general Closed School Discharge guide.

Documentation checklist (practical)

• Enrollment agreement or contract
• Official or unofficial transcripts showing enrollment dates
• Withdrawal notice or campus closure announcement
• Emails, letters, or marketing materials that show misrepresentation (job placement claims, licensure promises, admissions promises)
• Copies of loan promissory notes and servicer statements
• Any state or accreditor notices about the school’s status

In a recent case I handled, a borrower’s advertised job-placement rates (printed brochure and emails) were key to proving misrepresentation for a false-certification-style claim.

Timing and processing expectations

ED aims to process some discharge requests within 90 days, but many cases — especially those that require investigation or third-party records — can take longer. Expect several months in complex cases. Your loan servicer should place loans into an administrative forbearance or mark them pending discharge during the review; verify your account statements and contact the servicer if you see continued collection activity. (StudentAid.gov guidance.)

Tax implications

Tax rules can change. Under the American Rescue Plan Act of 2021, certain discharges of student loan debt are excluded from federal taxable income for tax years 2021 through 2025. As of 2025, borrowers should confirm current IRS guidance on whether a specific discharge will be reported as taxable income (IRS.gov). I recommend checking IRS guidance or speaking with a tax professional before assuming tax treatment.

Common mistakes and how to avoid them

• Assuming the discharge is automatic: You must apply and document your claim. ED does not automatically discharge all loans just because a school closed.
• Missing documentation: Submitting weak or incomplete evidence delays approval. Be thorough and organized.
• Confusing borrower defense with false-certification: They’re related but separate processes. Borrower Defense to Repayment (BDR) applies to broader misrepresentations and may use different forms and standards. Review the BDR guidance if your claim is about program quality or fraud. (See ED’s borrower defense pages on StudentAid.gov.)
• Ignoring private loan balances: ED discharges cover federal Title IV loans only. Private lender balances require separate negotiation or legal remedies.

Practical tips I use with clients

• Build a single evidence packet (PDF) with a one-page cover letter outlining key dates, loan numbers, and your requested remedy.
• Keep a timeline of events (enrollment date, withdrawal date, closure date, key communications).
• Use certified mail or the ED upload portal and save confirmation receipts.
• Contact your loan servicer early to make sure they’ve received notice your application is under review.

Examples (anonymized)

• Closed-school example: A borrower enrolled full time and the campus closed mid-term. ED approved discharge because the borrower couldn’t complete the program and the closure date fell within the allowed window.
• False-certification example: A vocational student was enrolled despite not meeting state licensure prerequisites. The school had certified eligibility for federal funds. ED granted a discharge after proof of misrepresentation.

When to get professional help

If your case involves substantial documentation, potential litigation, or if you’re being pursued for collection on a disputed balance, consult a student loan attorney or a nonprofit student loan counselor. In my experience, professional help is worth the cost when documentation is complex or the servicer disputes your timeline.

Authoritative resources

• U.S. Department of Education, Federal Student Aid — Closed-School Discharge: https://studentaid.gov/manage-loans/forgiveness-cancellation/closed-school
• U.S. Department of Education, Federal Student Aid — False Certification: https://studentaid.gov/manage-loans/forgiveness-cancellation/false-certification
• National Student Loan Data System (NSLDS): https://nslds.ed.gov
• IRS guidance on tax treatment of student loan forgiveness (check current pages at https://www.irs.gov)

Final notes and disclaimer

This article explains the rules and practical steps for Closed-School and False-Certification Student Loan Discharges as of 2025 and references official ED and IRS guidance. It is educational and not individualized legal, tax, or financial advice. For decisions affecting your finances or taxes, consult a qualified professional.

If you want, I can help you draft a one-page evidence cover letter and a timeline template to support an application.